Regulation and competition

The UK government’s decision to implement the EU insurance mediation directive by giving the job to the Financial Services Authority (FSA) now means the FSA will have to take a much greater interest in the relationship between the individual policyholder and the industry than it has done in the past. According to FSA chairman Sir Howard Davies , the FSA has so far not taken direct responsibility for the selling and marketing of general insurance. But Sir Howard recognises there could be spinoff benefits in terms of the FSA’s understanding of the overall business, which could help it manage the prudential side better. For example, it may help the FSA identify those companies that are mispricing risk, and whose business practices are questionable. But the prime justification of taking on the task is to enhance consumer protection. Delivering the Airmic annual lecture in London at the end of last month, Sir Howard spelled out the FSA’s principal areas of concern in relation to the EU insurance mediation directive.